Amazon may need three years to recover from warehouse overexpansion

According to consulting firm MWPVL International, it may take Amazon three years to recover from its warehouse expansion during the pandemic , which has planted hidden dangers for the e-commerce giant . However, an Amazon spokesperson called the story "pure fiction."

Marc Wulfraat, president of MWPVL, said on a recent conference call that Amazon added 52 million square feet of warehouse space in 2022, less than half of the new warehouse space added in the previous two years . Wulfraat estimates that Amazon added 125 million square feet of warehouse space in 2020 and 137 million square feet in 2021.

In 2022, due to the downturn in e-commerce business and the deterioration of the global economy , Amazon postponed or canceled some warehouses that were planned to be put into use , and shut down some projects . Not long ago , Amazon also announced a layoff of 18,000 people.

Wulfraat said that despite the slowdown, Amazon's warehouse square footage growth last year was still large compared to Walmart , which now has about 150 million square feet of warehouse space in the U.S. In other words, Amazon added about a third of all of Walmart's warehouse space last year alone.

Amazon currently has approximately 578 million square feet of warehouse space in the United States and approximately 834 million square feet of warehouse space worldwide .

Wulfraat estimates that Amazon currently uses about 65% of its total warehouse capacity , down from 85% in 2019. He said this is because Amazon has overexpanded in recent years, with warehouse growth outstripping product sales growth. Wulfraat estimates that it will take another two to three years for Amazon to reach its 2019 capacity utilization level.

"This data is absolutely incorrect, and if some organization chooses to publish an article based on this data, the article is pure fiction, " an Amazon spokesperson wrote in an emailed statement. A Walmart spokesperson declined to comment .

Wulfraat said MWPVL's numbers are "very close" to what Amazon itself discloses in its annual report to shareholders. He noted that MWPVL had previously projected Amazon's globally actively operated warehouse space at 393 million square feet in 2020 and 529 million square feet in 2021 , while Amazon reported 406 million and 523 million square feet .

Amazon scaled back its warehouse expansion plans last year, saving as much as $4 billion, according to Wulfraat .

Based on this information, it can be seen that Amazon will continue to control its warehouse expansion in the next few years, and there may even be some contraction. Sellers can adjust their strategies in time according to new trends.

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